Sunday, October 24, 2004

Halliburton's $180 Million Bribe Scandal: A Can of Worms...

Halliburton's $180 Million Bribe Scandal: A Can of Worms...
By Olusegun Adeniyi

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In rating Nigeria as the third most corrupt nation on earth last week, Transparency International (TI) had provided insight into how oil fuels corruption. "In these countries, public contracting in the oil sector is plagued by revenues vanishing into the pockets of western oil executives, middlemen and local officials".

Of course the Federal Government, rather than accept the verdict in good faith, has resorted to name calling. But most observers believe TI report essentially captures what happens in the oil industry where rent seeking is the name of the game. And since oil accounts for most of Nigeria's revenue base, it is therefore not an accident that whatever happens in the sector must have informed the TI perception index.

While this government might have made some efforts to combat the malaise through some of its reforms, the reality on the ground is that corruption in Nigeria, especially in the oil and gas sector, is gargantuan. And nothing confirms this more than the on-going probe in the House of Representatives into the Halliburton $180 million bribe scandal. The Chudi Offodile-led Public Petitions Committee probing the Nigeria Liquefied Gas slush fund used to bribe Nigerian officials, has provided hint as to how our nation is so easily short-changed on the altar of official greed.

While there have been a few shocking disclosures in the course of the House probe, what is actually public knowledge in Nigeria about the scandal is a mere tip of the iceberg compared with the monumental revelations coming from the French court in which the central character in the whole saga, Jeffrey Tesler, is being tried.

What many Nigerians may not be aware of is that the $180 million bribe issue is already a subject of international inquiry with our nation attracting sordid headlines. But it was a French court which first blew the thing open when it launched an inquiry into allegations that one of the firms, KRB, paid $180 million to Nigerian government officials to win contracts for the construction of the first-two trains of the Nigeria Liquefied Gas (NLG) Project in the 1990s. This was followed by another probe of the TSKJ consortium by the United States Securities and Exchange Commission (SEC) last June.

Halliburton, the big corporation enmeshed in the dirty deal, has insisted on its innocence since investigations began last year by both the SEC of US and French authorities while maintaining that the alleged bribing of Nigerian officials occurred before its acquisition of KBR. But nobody is buying this marine tale and the Federal Government, on the recommendations of the Offodile committee, has since banned the company from carrying out any work in Nigeria because of its corrupting influence which has become evident with the on-going trial in France.

But there is a local dimension to the whole ugly drama. While testifying before the House Committee last week, former Chairman of the NLG, Alhaji Mohammed Dikko Yusufu, denied collecting any dirty money from TSKJ Consortium believed to have facilitated the bribe to Nigerian officials. He, however, admitted that those involved in the bribery scandal like Mr. Jeffrey Tessler had at various times advanced him some monies before he became chairman of the LNG and after he was removed. He, however, said the monies were loans and part of it he had repaid. "I was in London and needed money and he gave me as loan. Sometimes I pay back and sometimes I don't. We have been friends for long. Sometimes one thousand pound, sometimes two thousand pounds", he said.

Yusufu admitted that both Tessler and Mr. Gilbert Chagouri were old time acquaintances, but that neither tried to influence him to award the NLNG contract to TSKJ. Asked if the money he took from Tessler was not meant to influence his judgment on who should get the $2.9 billion contract, Yusufu shook his head and simply replied, "no".

He said that since he was taking orders from the Head of State, the late General Sani Abacha, he tried his best to get the best for the country and stemmed the prolonged delay in the project take off. Former Minister of Petroleum, Chief Don Etiebet, while giving evidence said he had no hand in the award of the NLNG contract to any of the consortia.

He said his problem with the TSKJ group arose from disregard of the simple rule of giving the contract to the lowest bidder. He said he was abroad when the contract was finally signed and awarded by the Board of the LNG headed by Yusufu. "I don't know anything about the bribery allegation, I only read about the investigation in foreign and local papers. I have never met Tessler. I was not part of the team that awarded the contract, I was not involved", he said.

Chagouri, Tessler, Dan Etete among others were billed to appear before the House committee to testify on the issue but none of them did last week and there are indications that they may not. Etete on his part deposed to an affidavit at an English court which he sent to the House Committee, claiming innocence. But a source described the contents of his letter as "mere cock-and-bull story".

The bribery saga began when TSKJ, the Portugal-registered company owned jointly by Halliburton's Kellogg Brown & Root (KRB), Technip SA of France, Eni's Snampro-getti Netherlands and JGC Corp. of Japan, only recently, in the early nineties won the contract to build the $1.7 billion Train six of the LNG plant. On the face value, they bidded fair and square. But facts now emerging indicate they may have secured the contracts after greasing the palms of several business men, politicians and public officials and that is what is at the root of the current probe. Although the names of several people have come up and many others will yet surface as the investigation and trial progress, the principal characters appear to be Gilbert Chagouri, the Lebanese business man friend of the late Head of State, General Sani Abacha; former oil Minister, Chief Dan Etete and Abacha himself as well as Jeffrey Tessler, the British "Consultant" who has only been to Nigeria once in his life yet has been making hundreds of millions in dollars from our oil since 1977. It was Tessler who allegedly gave bribes running into $180 million dollars to Nigerian politicians, business men and public servants. There are, however, insinuations that another principal character could be the United States Vice President, Mr Dick Cheney but there is yet no direct link to him and nobody has mentioned his name as being involved in anyway. Curiously, Halliburton officials had last year complained that the whole bribery investigation in France was targeted at Cheney who was Chairman and Chief Executive of Halliburton between 1995 and 2000, the period the whole scandal played out. Incidentally, of all the current investigations into Halliburton and its subsidiaries, the Nigerian case is the only one that covers the period Cheney was running the company and that is why in the US opposition politicians believe he has questions to answer on the issue. Perhaps to save Cheney any embarrassment on the scandal, Halliburton had to sack and disown former KRB President, Albert Jack Stanley, who incidentally, was appointed by Cheney into the position in 1998 and another official, William Chaudan because they were said to have facilitated the bribe slush funds for Nigerian officials. In the inquiry proceedings instituted following statements made by Mr Kramer, an executive of Technip, on 1 October 2002, he confirmed the existence of a secret fund established in Madeira via LNG Servicos and Tristar, on 8 October 2003 while the main charges against Tessler were:
corruption of foreign public employees (deeds committed in part in December 2001 and May 2002 in Rome and Paris by approving, as part of the board of directors of LNG
abuse of public property, complicity in and concealment of this offence (deeds committed in Paris, Courbevoie to the detriment of SA Technip Coflexip at the time of the conclusion in 1999, July and December 2001 and June 2002, of 3 contracts 'of logistical support and assistance' by the companies LNG Servicos and Tristar. The bids were related to the construction of gas liquefaction plants in Nigeria. The Nigerian Liquefied Natural Gas company (NLNG) is jointly owned by the Nigerian National Petroleum Corporation (NNPC), Shell, Total-Fina-Elf and Agip (D12). In 1994, according to the court document, NLNG invited interested parties to tender for the construction of two natural gas liquefaction plants ('trains') on Bonny Island. Four engineering companies, Technip, Snam Progetti, Kelloggs Brown and Root, and JGC (Japan), formed a joint venture called TSKJ, registered in Madeira, to tender for the work. The consortium was led by Kelloggs Brown and Root. The subsequent bids, concluded in l990 and 2002, were negotiated amicably, without public tender, with the same partners. According to Mr Desseilligny, a senior Technip executive, Shell was the operator. The bids sought were three in number: the first for trains 1 and 2, the second for train 3 and the last, signed in 2002, for train 4. They were concluded between Nigerian LNG on the one side, and on the other three companies registered in Madeira, TSKJ Servicos, TSKJII Constructoes and LNG Servicos. The first contract, worth a total of $2.2 billion, was concluded in 1995 (with effect from 1 December 1995). The second was concluded on 6 March 1999 for a total of $1.4 billion. The third was concluded on 22 March 2002 for a total of $1.7 billion. The partners in the joint venture are four in number:
Technip
JGC
Kellogg Brown and Root
(Snam Progetti missing NB] Christine Wahnon (married name Lopez) and Mr Galliano Tristar concluded contracts of logistical support and assistance with LNG Servicos. According to an LNG Servicos document dated 17 March 2003, Tristar (owned by Mr. Tessler) was engaged as consultant on the recommendation of Mr W. Kellogg, over the strong objections of Technip and in particular Mr Kranimer who favoured other consultants. It was for that reason that Tristar supplied its information directly to Kelloggs. Mr Tessler has a personal relationship with Kelloggs having been its consultant on other projects dating back to the l980s. Tristar has numerous contacts in Nigeria gathered over thirty years, especially among senior officers and politicians. It acts as consultant to several construction companies. According to the Technip Financial Director Mr Burlin, Tristar was introduced by Kelloggs to its partners, who accepted it. A message or memo from Mr Chodan of the Kelloggs company confirms that Tristar was chosen on Kelloggs's recommendation over opposition from Technip and in particular Mr Kranimer, who favoured other consultants. Mr Tessler in fact had close relations with Kelloggs having been their consultant in Nigeria on a number of projects since the 1980s. He also seems to have been the private adviser of numerous personalities from that country including businessmen, military officers and politicians. Mr Tessler also seems to have been a consultant to many firms operating in Nigeria. A memo of 17 March 2003 from, the director of LNG Servicos, Mr Chodan, says that Tristar had been engaged by the joint venture on the recommendation of Kelloggs over the strong objections of Technip and in particular Mr Kranimer who favoured other consultants. Mr Tessler has professional and personal relations with Kelloggs. As he had already acted as the company's consultant in other projects since the 1980s, both parties wished to continue their collaboration. Tristar's capacity to succeed as the joint venture's consultant resulted from its deep knowledge of the country and its numerous contacts assembled over thirty years spent working there. Mr Tessler was also described as the personal legal adviser of many people including businessmen, military officers and politicians in Nigeria while operating as consultant to many firms operating within our country. "As a result, his advice may well have been crucial in deciding what strategy to adopt during the negotiation of contracts, and contributed to the success of the joint venture in obtaining and carrying out three successive major projects. Mr Gory, a senior Technip executive who admits to having been involved in negotiating the contracts with Tristar, confirmed that this agent had been brought in by Kelloggs. He described him as a London lawyer who has an office in Lagos. It is a high profile company in Nigeria, he explained, which had worked with Kelloggs in the past." According to Mr Kranimer, Tristar is directly involved in the corruption of public officials in Nigeria while his job basically consisted of "providing a permanent flow of information on (events in) Nigeria and on the strategies of the Nigerian government and administration, providing the client with commercial follow-up and continuity and supplying logistical and administrative assistance on site." The first contract was signed on 20 March 1995 by Mr Tessler (Tristar) and Richard Northmore on a basic sum of 660 million, adjustable according to the size of the main contract. Tristar's address is that of the UBP in Geneva. This contract is not named in the first indictment. The second contract was signed on 18 March 1999 between the same two companies, represented by Mr Kaye (Tristar) and Robert Parker, on a basic figure of $32.5 million. A specific clause stipulates, on pain of cancellation of the contract, that no payment can be made to any third party including government employees, officials, political parties or political campaigns. This clause was repeated in the contracts that followed. The consultant guaranteed that the principle had been followed with the 1995 contract. The third contract was signed on 12 July 2001 by Mr Tessler and Mr Parker. Tristar's address was given as that of the HSBC in Monaco. Tristar undertakes to assist LNG Servicos with its claims on the client for execution of the project (trains 1 and 2), for a percentage of the sums obtained. This contract is not named in the first indictment. Tristar, according to Mr Gory, would compile reports for Kelloggs, which would then pass them on to the other members of the joint venture. In reality, according to Mr Krammer, Tristar's reports on its activities were servile, complacent and uninformative. Yet Tristar's fees were:
$60 million for the first contract (20 March 1995)
$37.5 million for the second contract (18 March 1999)
$51 million for the third (24 December 2001)
$23 million for the fourth (28 June 2002). It is from these sums of money that Tessler was able to dispense favours and THISDAY checks reveal that reports before the French investigators implicate many top officials currently working with NNPC and its subsidiaries who were at different times beneficiaries of sums of money ranging between $50,000 to millions of dollars depending on status and relevance to the LNG project though there was no evidence that bribes were solicited by them. Incidentally, even before the contract was awarded, there were mutual suspicion between Etiebet, the then Minister and Yusufu, the LNG Chairman going by the contents of the memos they exchanged. On September 22, 1994, Etiebet had written a two-page memo to Yusufu, calling into question the integrity of the whole bidding process. Part of the letter read: "Information available to me indicates that NLNG Ltd have seriously tinkered with the integrity of the pending award of the EPC contract. I thought it was supposed to be handled with utmost confidentiality, without interference from any quarters. It seems that is not the case now as members of the two consortia are jostling around the place armed with very relevant and important data to canvass for support from one quarter or another. "Members of the two consortia have met me in London discussing the projects EPC's tender evaluations and recommendations with such details that beat my imagination. While one group talks with all assurances and exciting glee of clinching the contract because of being technically capable and financially much cheaper and competitive, the other group talks of unfair discretionary evaluation with unequal and unclear penalty levies, which have contributed to tilt the scale on cost towards a 'preferred' consortium" But Yusufu would not allow Etiebet's allegation to go unchallenged. He fired back a memo just 24 hours later: "I would like to register my concern for your insinuation that 'NLNG Limited seriously tinkered with the integrity of the pending award of the EPC contract'...I am surprised that you met members of the two consortia in London. You may wish to note that this is an International Tender with strict procedures. At the time you met them, no decision had been taken by the Board of the Company. It is difficult to see the reason for your meeting them. Even more serious was the fact that you listened to them, seem to believe them, and clearly indicted the company who in my view have done a good job." Notwithstanding this acrimony, however, the contract was approved by the NLNG Board forty eight hours later in what Yusufu called a 'unanimous decision'. But questions are now being raised as to whether the letter was written and the contract awarded even before the Board meeting. Because the letter titled Nigeria LNG Limited 44th Board Meeting was dated September 23 yet the first paragraph of the letter to Etiebet with the prefix 'Dear Chief' read: "The Board of Nigeria LNG Limited has today, Saturday 24th September 1994, taken a unanimous decision to select the Consortium of Technip, Kellogg, Snamprogetti and JCC as the preferred main contractor, and immediately to enter into further negotiations with the consortium, to be concluded by mid-October. The two consortia have already been informed accordingly." Now that French investigators are after Tessler, he not only seems to be cooperating, he is said to have provided a lot of information about the dirty deals in the Nigerian oil and gas sector of which he is an authority notwithstanding that fact that he has only been in the country once and even that was more than two decades ago. Curiously, Tessler had his hands in other lucrative oil deals. He was the same man who fronted for Etete to buy the juicy Block 256 for a mere $8 million from Sherwood Petroleum in January 1999 during the General Abubakar Abdulsalami era. When Obasanjo took over three months later, he seized the oil block and sold it to Ocean Energy for $240 million, a decision that did not go down well with Etete and his now subject of litigation. But the former petroleum Minister who was once in the news for keeping two lions in his personal zoo has said he is above corruption. His affidavit was deposed to by one Martin Emil Buchner, Notary Public of the city of London and elsewhere in England who attested that: "The signature set to the hereunto annexed document is genuine, the same having been this day subscribed thereto in my presence by Dauzia Loya Etete, born on 10th January 1945, who identified himself to me by means of his Federal Republic of Nigeria Passport No. A2114294, issued on 14th November 2003." Etete's own statement was titled The Case of Alleged Bribery Against TSKJ (RE: NLNG Project) and it reads: "Mr Chairman, House Committee on Public Petitions, Abuja. You may wish to recall that I was appointed to the office of the Hon. Minister of Petroleum Minister by the late General Sani Abacha in March of 1995. You may also recall that this NLNG project has been handled by some previous Petroleum Ministers and Secretaries of Petroleum. In fact at the time of my appointment as the Hon. Minister of Petroleum, this project has already gone through both tender pre-qualifications, the so-called international open tender bidding which was handled and managed by Shell in their Hague head offices in the Netherlands. The negotiations, selections and award of the contract to TSKJ was in 1987. The signing of the contract took place in London, UK, the records are there for anybody to see. Now, when I came into office, I met the NLNG project at the stage of implementation. It is also correct to say that different Boards and top Managers have handled this NLNG project at different times. "Let me be very categorical and be very firm to say here as follows. There has never been a time that any one or group of persons has come before me in private or in my office as the Minister of Petroleum resources to discuss more to be given to me or anyone in government. My late boss neither discussed this issue of bribe taking with me nor did he instruct me to do so. No one from Shell or Halliburton (TSKJ) has approached me to offer me bribe for any contract. Nobody from the shareholders has approached me for this same reason either. I guess that as you make progress with your investigations into this matter, you may discover the truth that I was not involved in this matter. "Finally, if anyone persons contradict me on this my statement and you need any clarification, please do not hesitate to contact me. I wish you the best in your investigations. Based on the above: I Dr. Dauzia Loya Etete has never been involved in any discussion or negotiation for kickbacks or bribery with anybody or group" he concluded. From what has been revealed about the LNG contract award and how bribes were allegedly given several officials by Tessler, it is easy to see how rent seeking destroys the oil industry. This much was confirmed by a top official of the NNPC though while discussing a different issue yesterday. THISDAY had sought to know the reason that informed jerking up the turnover requirement from $500 million to $5 billion for companies importing fuel, a decision that has edged out several Nigerians and he replied: "Which people have been edged out? What happens essentially is rent seeking and I can assure you that since we adopted that policy, we have had some peace. Most of those people who were getting those licences were young boys with no visible means of livelihood yet were making millions of dollars and pounds just because their father or mother could peddle influence." The NNPC official argued further that it took gut to take the decision because it was one of the avenues by which Nigeria was being milked by many Nigerian politicians and their so-called foreign partners. "It took a lot of courage and a man like Funso Kupolokun to do that because they could not do it in the past. If he too wanted to continue the old regime, it was an easy way to make Chief money as many unscrupulous officials do but the man had to put his foot down to say 'thus far and no more' and I believe Nigeria should salute him for that. Of course some people are unhappy because their source of cheap money is gone but Nigeria is the better for it." But even from the way things are today, rent seeking is so entrenched in the Nigerian oil sector that it would take some time before a new culture becomes the norm. And as the LNG bribe investigation and the court case continue in France, there are indications that many more Nigerians, especially within the public service may run into problems As the investigation and drama continue, not in Nigeria but in France, (because the relevant authorities here, including the Economic and Financial Crimes Commission, have not done much to unearth what happened), Nigerians may yet have an idea of where the oil revenues have been going. But in this first part of our series into the saga, we bring you one of the court proceedings involving the testimony of Tessler and the letter of Etiebet to the House Committee which sources hinted at the weekend may open other Pandora boxes on the scandal that will not go away...


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